Here, we have a local abstract type X.s, but it cannot be refined by opening the GADT.

We have faced this situation in real code, where we were forced to create a local polymorphic function (with explicit local abstract types) and use it immediately on a fixed type obtained by unpacking a first-class module.

Would it be possible to allow GADTs to add equations to such local abstract types introduced by module unpacking?

I have already been thinking about that for a while.
The main problem is that it would require modifying types deep in the environment.
This is clearly an objective for the next version if it can be done simply enough.
In the meantime, eta-expansion is indeed your friend.